Thursday, April 27, 2006 · Last updated 7:04 p.m. PT
Medicaid audit questions nearly $1 billion in spending
OLYMPIA, Wash. -- Washington state's Medicaid program made nearly $1 billion in questionable payments last year, and may have to refund millions of dollars for improperly paying illegal immigrants' medical bills, a state audit said Thursday.
The sweeping review by state Auditor Brian Sonntag also questioned the state Medicaid agency's investigation of some abuse claims and its controls on identity fraud and prescription drugs, including steroids.
Officials with the state Department of Social and Health Services disputed some findings, but said they would work with Sonntag to iron out conflicting rules that govern health care programs.
"We share a common goal of ensuring the proper use of public funds," said Robin Arnold-Williams, the department director.
A yearly probe of Medicaid spending is required under federal law because the federal government splits the program's costs with the states.
The 155-page audit released Thursday covers the state budget year that ended in June 2005. Washington's Medicaid program spent more than $6.2 billion in that period, Sonntag said.
Auditors identified nearly 30 problem areas for the program. The nearly $1 billion in questioned spending includes more than $83 million in payments for thousands of illegal immigrants' medical expenses.
Half of that money came from the federal government, which only allows its share of Medicaid to be spent on undocumented immigrants in emergencies.
The state was paying providers for non-emergency care, including treatments for ingrown toenails, dental care and acne, auditors said.
"This is causing the nation's taxpayers to subsidize Washington state's noncompliance," the audit said.
That total includes up to $32 million in federal money spent on care for pregnant undocumented immigrants, despite an order to limit that care to childbirth. The state may have to refund that money to the federal government, the audit said.
Auditors from the federal inspector general are now performing their own review of the state's Medicaid spending on undocumented immigrants, officials said.
The DSHS, which oversees Medicaid, said it has since improved policies for tracking improper spending. The federal audit should clear up any other policy misunderstandings, the department wrote.
State auditors also reviewed the department's policy for sex-change surgeries, some breast surgeries, and other potentially "elective" procedures. State Medicaid officials said they had paid more than $110,000 for two gender-reassignment surgeries since 2000, and about $12,600 for corrective surgery after a sex-change operation performed in another country.
The agency has since started to deny requests for sex-change surgeries, saying in a statement that it found "other therapies were equally effective, less costly and incur less risk."
Three people have appealed such denials, and the cases are not yet resolved. Three others have placed initial requests for Medicaid coverage of the surgeries, the state said.
Sonntag noted that the latest audit was much smoother to perform than the previous review, which was not completed after auditors said state officials were not cooperating.
"It's not a fight this time, and we both want to be able to look to the feds for some resolution, and I think that's going to happen," he said.
On the Net:
State Medicaid agency: http://fortress.wa.gov/dshs/maa/index.html
From the Evergreen Freedom Foundation web site:
2006 PRESS RELEASES
April 27, 2006
$1 Billion in Medicaid Expenses Questioned by the State Auditor
DSHS continues to be plagued by repeat audit findings
OLYMPIAThe State Auditor issued 28 audit findings today concerning the state's administration of the $6.2 billion Medicaid program (state and federal funds). These findings lead State Auditor's Office (SAO) to question nearly $1 billion in costs for the program; 16 percent of all dollars spent.
The auditor also issued 21 audit findings against the Department of Social and Health Services (DSHS). This follows last year's audits in which the State Auditor issued 19 findings against DSHS (14 of which have not been resolved) and 22 audit findings in the state's Medicaid program (18 of which have not been resolved).
Bob Williams, President of the Evergreen Freedom Foundation, released the following comments in response:
"Any repeat audit finding is unacceptable, let alone the news that a majority of the problems identified last year have not been corrected. State officials' failure to follow the law has potentially led to $1 billion in consequences for taxpayers.
"Taxpayers and those individuals actually eligible for assistance pay the price when state officials refuse to enforce eligibility requirements.
"Until the legislature and governor ensure strict consequences exist for state agencies violating the law, we will continue to see year after year of the same audit problems and countless waste of taxpayer dollars.
"As noted by the State Auditor, 'Lack of compliance with federal regulations could jeopardize future federal funding.' This could mean the loss of billions of dollars."
SAO Audit Executive Summary
(2005) DSHS fails $6.1 billion Medicaid audit
DSHS may owe millions
$1 billion in 'questioned costs' cited
April 28, 2006
OLYMPIA Washington may have to repay up to $32 million in federal funds it spent on medical care for illegal immigrants, state auditors said Thursday, in two reports detailing nearly $1 billion in "questioned costs."
The audits covered the state Department of Social and Health Services and the state's $6.2 billion Medicaid program. DSHS is by far the largest state agency, with 17,000 employees and a budget of about $8 billion a year.
"We're talking a substantial amount of public dollars federal and state money and the ability of those dollars to be accounted for," said State Auditor Brian Sonntag.
"The sad thing is the number of repeat violations," said Bob Williams, a former state lawmaker who now heads up the conservative Evergreen Freedom Foundation. "There's no excuse for this."
DSHS officials agreed with some of Sonntag's findings but disputed others. Many of the situations are not as clear-cut as the audits suggest, they said. The agency, they said, is moving quickly to improve its cost controls and fraud detection.
"That gets lost," said state Medicaid director Doug Porter. "The auditor's told to go out and find things that are weaknesses."
Among the audit findings:
The state is improperly using federal tax dollars to pay for routine medical care for illegal immigrants, when only emergency care should be covered. Of $103 million the state paid to health care providers in fiscal year 2005 for treatment of illegal immigrants, auditors found millions of dollars in billing codes for cosmetic dentistry, eye exams, contraception, carpal tunnel syndrome, ingrown nails, acne and hearing exams.
State workers are not consistently verifying Social Security numbers for people applying for Medicaid health coverage. "Further," one audit report states, "the Department does not heed federal alerts notifying staff of invalid Social Security numbers."
The state is paying widely-varying prices for the human growth steroid Somatropin. Auditors say that the state paid from $47.79 to $5,061 per dose, "at the same dose and even the same provider."
Washington's Aging and Disability Services Administration isn't making sure that complaints of abuse, neglect, financial exploitation and death at residential care facilities for the elderly, disabled or developmentally disabled get investigated according to federal guidelines. In most cases, auditors found, the state relies on the facilities to do their own investigations.
The state has paid for two people to have sex-change surgery since 2000, with three other people currently appealing the state's denial of their requests to pay for sex changes.
DSHS doesn't have sufficient safeguards to prevent people from getting state-paid medical care by using a dead person's Social Security number. In Medicaid billings from fiscal year 2005, auditors said they found hundreds of instances of medical bills charged on behalf of dead people.
DSHS made duplicate payments totaling nearly $117,000 to social service providers.
State Rep. Bill Hinkle, R-Cle Elum, said he wasn't surprised by the findings. Political leaders must find the will, he said, to make tough changes.
"I think it's hilarious that the Democrats want to talk about universal health care when we can't even do Medicaid," said Hinkle. He's calling for creation of a state inspector-general office to police fraud and improper spending.
"(New DSHS head) Robin Arnold-Williams, to her credit, is doing the best she can," said Hinkle. "But she's new, and she's inherited a mess."
Sonntag also praised Arnold-Williams, saying that she's made the agency much more cooperative with his auditors. She's responsive, he said, and aggressive in trying to address problems.
But most of the problems cited by auditors are not as black and white as they sound, DSHS officials said Thursday.
Federal rules, for example, specify that federal dollars can only be spent on medical care for undocumented aliens in medical emergencies. But they don't define well what constitutes an emergency, said Porter. If a roofer, say, falls and breaks his arm, that's clearly an emergency. But, Porter said, it's unclear if it's still an emergency when he goes back six weeks later to have the cast removed.
Of the $32 million in questioned spending, he said, "We think they were services that people desperately needed, and we felt obliged to pay for them. We've erred on the side of trying to be reasonable."
As for the wildly different prices paid for Somatropin, he said, the differences were due to different strengths, packaging and other factors. (The auditor's office, however, disputes this.)
And the sex-change operations? Medicaid is required to pay for "medically necessary" treatment, Porter said. Until about three years ago, sex-change surgery was a covered procedure. But the state now refers people who feel they're the wrong gender to psychotherapy and hormone treatment, which Porter said have proven equally effective treatments. A few people have appealed that decision. The state is resisting, but if they win their cases, Washington will likely have to pay for additional sex-change surgeries.
Contrary to what the audit reports say, state workers do check Social Security numbers for people seeking Medicaid coverage, Porter said. But a federal directive, he said, also prohibits the state from refusing coverage to people who won't provide a number.
Lastly, another DSHS official disputed the audit finding that DSHS isn't ensuring that complaints about residential care including nursing homes, boarding homes, adult family homes are investigated properly. Yes, the facilities investigate their own complaints, said quality assurance administrator Sheldon Plumer, with the Aging and Disability Services Administration. But the state reviews those investigations and often requires more information. In about 5 percent of the cases, he said, the state will do its own investigation.
"We analyze their investigation," he said. "We don't just go in and see whether they've done one." http://www.spokesmanreview.com/tools/story_pf.asp?ID=128323